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Glmterkamp 



TECHNOCRACY 

AND 

SOCIALISM 

By PAUL BLANSHARD 



LEAGUE FOR INDUSTRIAL DEMOCRACY 



TECHNOCRACY AND SOCIALISM 

By PAUL BLANSHARD 



"Technocracy and Socialism" by Paul Blanshard 
is a reprint, with revision by the author, of a 
talk given at the luncheon of the League for In- 
dustrial Democracy at the Hotel Woodstock, New 
York City, January 28th, 1933. 

Luncheon talks on subjects of current economic 
importance are given by the League semi-monthly 
during the winter, and are broadcast over the 
NBC red network. 



Copyright, 1933, by 

THE LEAGUE FOR INDUSTRIAL DEMOCRACY 

U2 East 19th Street, New York City 



Printed in the U nited States of America 



IN one of his campaign speeches years ago Lloyd George, in 
criticizing an opponent, said: "1 feel like a man who is kicking 
a swinging door." That is how I feel about technocracy. The very 
meaning of the word shifts from day to day. Now it is one thing 
and now another; now it has one leader, and then that leader is 
ousted. 

Technocracy as a word applies to both a set of ideas and a 
group of men. For purposes of clarity I shall call the group of men 
technocrats, and the ideas of those men and the logical inferences 
to be drawn from them I shall call technocracy. The technocrats 
became famous when they were engaged in making an energy survey 
of North America as guests of Columbia University. The group, 
headed by Howard Scott, then split in two, with the major prophet 
heading his own pilgrimage and Professor Walter Rautenstrauch 
of Columbia leading a more solid and conservative brigade which 
no longer claims the name of technocracy. 

In spite of this split in the technocrats, however, it is fair to 
deduce from their writings and authorized and semi-authorized pub- 
lic statements certain central doctrines which comprise technocracy. 
Amid all the hokum, ballyhoo, and over-simplification, four ideas 
stand out. 

1. Machines are displacing men so rapidly that unemployment 
will reach 20,000,000 within two years. The output of manufac- 
turing industry has gone steadily upward since 1918 and the num- 
ber of workers steadily downward. Capitalism may soon reach an 
impasse, and the whole system may collapse. 

2. If technicians ran the American industrial system on an ef- 
ficiency basis the average worker would need to work only two 






hours a day to produce a standard of living five times as high as 
the average in 1929. 

3. The debt burden of the United States is too great to pay, and 
it never will be paid. The internal debt of the country alone (bonds, 
mortgages, bank loans, etc.) totals 218 billion dollars, and would 
absorb about half of the national income of 1928 in amortization 
and interest charges if the debts were amortized at a fair rate. 

4. The price system must go and in its place a plan must be 
developed for trading goods and services on the basis of some energy 
determinant, possibly non-transferable tickets denoting energy ex- 
pended* 

Of these four points some have been flatly stated by Howard 
Scott, Bassett Jones, and other leaders of technocracy, while some 
are logical inferences drawn from the writings of the technocrats. 

To back up their first and most important point the technocrats 
marshalled a number of facts designed to give the public a notion 
of the tremendous speed of machine progress in America. Many of 
these alleged facts which startled the American public were exag- 
gerated, and in the exchange of articles in the New York Times of 
January 8 and January 22, 1933 between Simeon Strunsky and 
Harold Ward many of the technocrats' errors became evident. The 
best modern straight-line brick production unit now in operation 
produces bricks at the rate of 15,000 per man per day instead of 
400,000, as some technocrats stated, and that includes only the 
machine operators in the plant. The brick manufacturers claim that 
the output per man per day in the factory does not now average more 
than 4,000 bricks. The rayon factory in New Jersey which, accord- 
ing to Howard Scott, could operate without a single worker on the 
floor, will probably have about twenty workers. One man can pro- 
duce at the most 550 times as many incandescent lamps as he could 
in 1914 instead of 9,000 times as many, as one technocrat had it. 
The automobile that can run 300,000 miles without overhauling is 
still in the field of technical possibilities. 






So much for the minor contradictions and misstatements for 
which Howard Scott seems to be largely responsible. How much do 
these miscellaneous mistakes discredit the central idea of technoc- 
racy? I believe that they have only a slight effect. The overwhelm- 
mg fact to which the technocrats bear witness is that the machine is 
wooing miracles in our modern life. For every statistical error the 
technocrats have produced concerning machine progress, a dozen 
\ ,, J el ,L aCCUme st «^«ts of machine miracles can be mar- 
shalled The modified claims of the technocrats are in themselves 
marvelous enough* 

No one disputes the fact that one automobile plant in Milwaukee 
with 208 men can turn out 10,000 automobile chassis frames a 
day, enough for the entire automobile industry of the United States 
1 he machines now in use in the cigarette industry often average 

f?™\77 Per u mi " nUte PM man 3S C ° mpared t0 * ™- «te 
of 600. Mr. Scott has not been contradicted in claiming that it took 

J<»I man-hours to produce a second-rate automobile in 1904 where- 
as it took only 92 man-hours to produce a better car in 1929 Stuart 
Chase has pointed out that we have developed engines that give 
human.ty almost a billion horsepower of energy, capable of per- 
forming the work of ten billion men. Mr. Chase, in a brilliant 
sentence m ha pamphlet on Technocracy, has summarized the ac- 
complishments of the new electric eye, which is symbolic of the 
modern machine process. "The photo-electric cell," he says, "which 
never makes a mistake and never knows fatigue, has been introduced 
to sort vegetables, fruits and eggs, to measure illumination, appraise 
colors, classy minerals, count bills and throw out counterfeits, time 
horse races, count people and vehicles, determine thickness of cloth 
see through fog, record smoke in tunnels, inspect tin cans, substitute 
a new process for photo-engraving, direct traffic automatically open 
doors at the approach of a waitress, count sheets of paper and 
measure their thickness, automatically control trains-to name only 
a few of its uses. Regardless of arithmetical mistakes by the techno- 



crats, we are in the grip of the machine age and it is changing our 
life so rapidly that the effect is bewildering. 

Meanwhile, although we have more mechanical genius than any 
nation in the history of the world, and a greater store of natural 
resources, the capitalist system appears to be approaching collapse. 
We have at least 13,000,000 persons out of work, and other millions 
only partly employed. Our farmers, if they are able to eat at all, do 
not average as much a $10 a week in income. Our men who work in 
factories average less than $20 a week and our women about $13. 
Our banks have enormous accumulated reserves of capital which 
cannot be used because the owners of that capital will not farm it 
out without security and an assured return. We have poverty in the 
midst of plenty, while some men become poor by labor and others 
rich by manipulation* 

In such a crisis it behooves us to brush aside the minor errors in 
the technocrats' figures, and get down to the larger principles in- 
volved. 

Capitalism is crumbling. What shall we do about it? The tech- 
nocrats have given birth to the four central ideas which I have sum- 
marized. Over against those ideas and as a supplement to them we 
have the philosophy and the program of socialism. Let us compare 
the central notions of socialism and technocracy. 

The difference between socialism and technocracy is, first of all, 
the difference between a complete system of thought and a set of 
stimulating but fragmentary ideas. Socialism is three things; a 
critique of capitalism, a plan for social revolution, and a classless 
society where collective ownership and democratic management of 
industry exist. The socialist says that capitalism is breaking down 
because it is an uncoordinated and unplanned system operated by one 
class for private profit, and that the only way out is to organize the 
entire productive system of the country into great public corpora- 
tions controlled by a national planning board. Technocracy also is 
a critique of capitalism, but it includes no thorough-going program 






for overthrowing capitalism and no complete outline of the kind of 
society which should succeed capitalism. The socialists have told the 
world what they really stand for; the technocrats have only written 
their first chapter. 

Let us take the four central ideas of technocracy that I have 
outlined, and look at them critically from the socialist point of view, 

1 . Machines are displacing men and capitalism is moving toward 
a collapse as unemployment inevitably increases. 

_ We socialists have emphasized the displacement of men by ma- 
chines for a long time, although we do not pretend to know how 
much of that displacement is permanent and absolute, and how much 
is due to the cyclical depression of capitalism. Possibly this displace- 
ment could be halted by certain modifications in capitalism such as 
the shorter work day, but the recent tendency is startling, and there 
is no proof that capitalism can ever reabsorb the 13,000,000 now 
unemployed. During periods of so-called prosperity, the volume of 
manufactured goods has increased at a far greater rate than the num- 
ber of wage-earners. In the years 1903-13, before the war, while the 
physical volume of production in manufacturing industries increased 
at the rate of 3.9 per cent a year, the volume of employment in- 
creased in these industries by 2.7 per cent each year. During the 
post-war period, 1922-1929, while the annual growth in manufac- 
tured goods was 4.5 per cent, that in volume of employment was 
only 1 per cent. 1 

It is interesting to note how greatly the productivity of workers 
has just recently advanced. The President's committee on social 
trends reported an increase in output per worker "of fifty per cent 



Dr. Frederick C. Mills, Recent Economic Tendencies, esp. pp 249 417 
N. Y.: National Bureau of Economic Research, 1932. In an average year* 
from 1899 to 1914, 1 man was inducted into the manufacturing industry 
for every 7 on the payroll, while only 1 out of every 48 men employed 
lert the industry for which he was working. In an average year after the 
war (1923-9) 1 man was brought in for every 22 on the payroll while the 
withdrawal rate was as 1 to 20 {Ibid., pp. 421-2). 



in the manufacturing industries since the beginning of the twentieth 
century." More than four-fifths of that increase came in the last 
decade for which we have statistics, yet it was during that decade 
that the number of manufacturing workers fell steadily. A table 
based upon the Handbook of Labor Statistics of the U. S. Depart- 
ment of Labor for 1931 shows that the index number of productivity 
per worker jumped from 1919 to 1927 in the steel industry from 
100 to 155 ; in the rubber tire industry from 100 to 262 ; in the auto- 
mobile industry from 100 to 146; and in the oil refining industry 
from 100 to 187. This table, prepared by my associate, Henry J. 
Rosner, shows the increase in productivity per worker in ten in- 
dustries from 1919 to 1927: 

i™-» rw« Meat leum Paper Cement Auto- Rubber Flour Cane 
StZ ikottpal^r^Zo |&'Mtrttf.'MMit Tires MilUng Su„ar 



iflio — loo ioo 

1027 — 135 115 



101) 

128 



100 
187 



100 
134 



100 
152 



JO0 

no 



100 
262 



100 

167 



100 
ISO 



In spite of this enormous increase in productivity, which in most 
industries was more than 50 per cent, the hours of labor were al- 
most as long in 1929 as in 1919 in these industries, averaging about 
fifty hours a week. And the workers did not begin to get a fair 
share of their increased productivity in the form of increased wages. 
As Professor Mills of the National Bureau of Economic Research 
again brings out, in the years 1922-29, the volume of production 
advanced by 3.8 per cent per annum, the amount invested in new 
capital equipment by 6.4 per cent per year, the net income of all 
corporations by 7.3 per cent a year, the dividend payments of all 
corporations by 12.8 per cent a year, and the profits of financial 
institutions by 16.2 per cent a year. On the other hand, the average 
earnings of employees in manufacturing establishments during that 
period increased at an annual rate of only 1.6 per cent! 8 Dividend 
payments of all corporations increased during that period from 
$3,437,000,000 to $8,356,000,000/ 



i 



■JfoVi., Esp. PP. 243,281,483, 502. 
*ibid., p. 490. 



So the fruits of the machine were given chiefly to machine own- 
ers, and this bad distribution of buying power had quite as much 
to do with unemployment as the new and miraculous inventions. 
Even if you grant that the investors are entitled to one-half of the 
value of the increased production, in a year such as 1929, when 
wages were at their peak, workers were cheated out of two billion 
dollars a year in buying power. This two billion dollars equitably 
distributed would go a long way toward keeping idle machines 
running by creating a demand for their products. 

I know that certain economists raise doubts as to whether the 
machine is permanently increasing unemployment. They point to 
the fact that, although factory workers have decreased, the auxiliary 
workers in manufacturing and the workers in personal service, sales- 
manship and the professions have increased. But there is no proof 
that this gain either balances technological unemployment or ab- 
sorbs the workers cast off by the factory system. Even an increase in 
total employment in the nation does not necessarily prove that un- 
employment is decreasing, because millions of new workers are com- 
ing into the system and looking for work each year. Some of these 
new workers were once in business for themselves and were forced 
into the employed class by machine changes. Enough new workers 
appeared on the American scene between 1920 and 1930 to increase 
the gainfully employed by seven million. They found jobs, and it is 
quite possible that they found the jobs which, according to theoreti- 
cal economists, reabsorbed the men thrown out of work by the 
machines. 

Unfortunately, we have no good statistics on unemployment to 
make conclusive reasoning possible. Thousands of the cast-off fac- 
tory workers are unfitted for personal or auxiliary services ; we can 
see them walking the streets hopelessly even in times of so-called 
prosperity. Even if some of them are absorbed into auxiliary occu- 
pations, I do not foresee a bright future for them. The area of 



salesmanship and p ers0 nal service will become increasingly mech- 
an.«d year by year, and then where will they go ? 

While socialists do not claim that net unemployment is sure to 
increase, they maintain that the only solution to V J ? 
machine displacement is to social LtSl T^Sel 
not wath rnachmes but with the way we use them. Because machines 

S7&51SJ the r plus of the *■** ° f 232 

S s Ir ^ ^ Pr ° dUCeS SUCh a "^distribution of the na- 
tion s, income that the workers cannot buy back enough nf !(, 
Products to keep the machines going. SodintSSt^TJ 

Z aH H PUrCh " e ; C a rCdUCed Prke a " d « --ary y c I'c 

out D n gr T,. lndUStrieS ° f the «"»** and °P«aTe twS- 
out profi as publ.c corporations under a national planning b2 
Th .would make possible a shorter work day and higher a S 

in the days of so-called prosperity We are n™™ j * , 

which will K ri 'n„ k i l . opposed to any scheme 

wnrcn will bring back the speculative orgies ni 1Q9S . j i, . 
oreies Dro*neWt„ u^ g y ^ 8 and cal1 those 

urgies prosperity, because no society can be called *ri,1„ 

10 



there can be no doubt that a four-hour day or a six-hour day might 
attain that end if our national energy were properly organized and 
controlled. Revolutionary prophets like Edward Bellamy and Karl 
Marx long ago predicted a world of plenty if machines could be so 
controlled that their products would be justly distributed. 

Where socialists differ with technocrats Is that they propose a 
democratic control of industry by all brain and hand workers. They 
honor the technicians for their skill, but they are not willing to trust 
the control of industry to any one class. Technicians under capital- 
ism have often been cold-blooded and self-seeking. Generally, they 
have been unwilling to work for labor justice because of the pos- 
sible danger of ruining their careers. Rarely do the great American 
engineering societies speak out against low wages, long hours and 
the denial of the rights of manual workers, Most American engin- 
eers, moreover, are surprisingly naive and uninformed about social 
science and social reform. I believe therefore that in the industrial 
system of the future the technician must be a subordinate part of a 
larger industrial democracy. 

We want a functional democracy — not a system of one-man- 
one-vote democracy, but a system in which each group will partici- 
pate in control. Under socialism the technician would be supreme 
over the technical departments of industry, but the ultimate control 
would be in the hands of three groups jointly, ( 1 ) the manual 
workers, (2) the technicians and managers, and (3) the consumers 
represented through the government. That is what we socialists 
mean by industrial democracy. Under that system, of course, men 
would be paid wages according to their experience and ability. 

3. The technocrats are right in saying that our debt burden is 
too large and that many of our debts will never be paid. 1 cannot find 
however any figures to indicate that our internal debt is 218 billions 
and that it takes half our national income to pay interest and amor- 
tization upon it — not unless you count some of our obligations twice. 
Probably it is fair to say, however, that half of our national income 



li 



33 ic&is rin^r ° n debt -*» « - 

poning their ret £n to ^ I ' "* "^ inStead of *»*- 

debt service even Sh ° Ur nat '° nal fnC ° me *™ t0 the 

h bad enough de f^.T^ "J"? ° f debt »*±*t This 
when We £fi ^g^'^ **«* apparent 
our national income ^^SS^J^Sd^T," "ft* 
pression. The wage-earners have taken t heI f t ' d " 

wage cuts; the bondholders have n ye" ad t fin" " aPPalIl ' ng 
porrionately. eir income cut pro- 

This condition is largely the result nf^ i t- - 
astern of distributing weahh „ ^ ' ^Sj J * ^ 
crazy system of debt pyramiding. Whe g e 1o« 
cumulated at the top of society, they are 2JS T , ' "* ** 

where, and once thmr a , ■ j , " d t0 be lnveste d some- 

-vestments. ilZSlSS * "^ ^ ""' UP °" ^ 

while the workers' a " enotl T*" T ^ ""^ 
burden by i„c ome *^S2^^ ?******* 
gages, a capital levy bv he » J r ' moratonurns on mort- 

S ociali zat io„ f g e T; in y du n " "tT IlZatl °" ° f b " k ** ™* by the 
different system for raisinl" J" T^ ' naUgUrate an «"'"«* 
-ance wo^ld ^SSff^Z £ <" ^ * * *' 

value according to the amount of gold in the wnrldt !""'" " 
of gold in the world k hMt a ' Slnce the arn °um 

12 



system, which gave money only to those who earned it and which 
adopted a currency adjusted to commodity values and national needs. 
Such a currency has been described by economists as a "managed 
currency." 

I think that the technocrats have given the world a considerable 
amount of mumbo-jumbo concerning energy units and their pos- 
sible use in place of money. The fact that energy can be measured 
in terms of ergs, joules, amperes, ohms and dynes does not prove that 
the price system should be abolished. Gold also can be measured, 
but that does not make it a good base for currency. The real problem 
of the price system is to equate the unit of currency with a fair sys- 
tem of reward for work. An opera singer might expend less energy 
than a blacksmith, but the proof of that fact would not help us to 
settle the question of a fair return for their respective services. 

Under capitalism prices are often unjust and intolerable be- 
cause they represent not so much the service of human beings as 
the manipulations and special privileges of economic highwaymen. 
When the technocrats attack the price system they ought to attack 
the capitalist system, for it is private ownership and control of the 
major sources of our wealth which makes the price system a horror 
in America today. 

The technocrats are extremely vague as to any system of energy 
currency which they propose. Until they can show more clearly the 
advantage of abolishing the price system I think we are justified in 
believing in that system. The price system allows the consumer a 
certain flexibility of choice in buying products which he desires, and 
this flexibility of choice is a useful thing in any social order in 
determining what goods should be produced and what should not. 

Socialism has a method of social reconstruction ; technocracy has 
not. Socialism has a complete economic plan for world reconstruc- 
tion; technocracy has not. We socialists say that the fundamental 
cause of poverty and unemployment is that our economic life is a 
feudalism controlled by one class, the capitalist class. We have or- 



is 



ganized a movement to wrest the control of industry from that class 
and give it to society. 

All history shows that a ruling class will not surrender its con- 
trol voluntarily. It must be displaced by organized power. In facing 
this fact the socialists are more realistic than the technocrats. The 
technocrats do not seem to realize that the mere Tightness of their 
ideas will avail nothing unless they have an organized movement be- 
hind them. The socialist movement is capable of being such a move- 
ment. It is still weak in America but its influence upon American 
thought is growing amazingly. It is now the most important political 
movement in the world. It is capable of taking all the good that 
exists in technocracy and utilizing it in the building of a new social 
order, 

BIBLIOGRAPHY 

Veblen, Thomein, The Engineers and the Price System, Viking, $1.50. 
Chase, Stuart, Technocracy, an Interpretation, John Day 25c 
Scott, Howard, and others, Introduction to Technocracy, John Day 90 c 
Arknght, Frank, A, B. C. of Technocracy, Harpers, $1,00 
Parnsh, Wayne W, Outline of Technocracy, Farrar & Rinehart, $2.00 
Day ^^^' Tke EC ° n07hiC Cons ^ Uen ^ of Power Production, John 

F ; ed Buie{; W?:; ft ° f SymP ° SlU ^ F ° r *« d *fW« technocracy, 

MAGAZINE AND NEWSPAPER ARTICLES 

Harper's Magazine, January, 1933, -Technocracy Smashes the Price Sys- 
tem, by Howard Scott and others. 
New Republic, December 28, 1932, "Technocracy," by George Soule 
Z ^and^he° CCember ' m2> " Toward Technocracy," by Howard Scott 
World Tomorrow, January 18, 1933, "Technocracy," by Paul H. Douglas 

r '1?o^^ by Gern * back "■** 

■%m«K^T"? '' ""' " A Ch3l,en ^ to Technocracy/' by 

New York Times January 22, 1933, "Technocracy's Answer and a Re- 
joinder," by Harold Ward and Simeon Strunsky. 
The Nation, February 1, 1933, "Scrambled Ergs," by Henry Hazlitt. 

14 



* I K HE league for Industrial Democracy is a membership society 
engaged in education toward a social order based on production 
for use and not for profit. To this end the League conducts re- 
search, lecture and information services, suggests practical plans 
for increasing social control, organizes city and college chapters, 
publishes a monthly bulletin and books and pamphlets on problems 
of industrial democracy, and sponsors conferences, forums, lunch- 
eon discussions, and radio talks in leading cities where it has chap- 
ters. The League invites those in sympathy with it to join its ranks. 



Its Officers for 1932-33 are 



President, Robert Morss Lovett 



Vice-Presidents 
John Dewey 
John Haynes Holmes 
Vladimir Karapetoff 
Alexander Meikle.tohn 
James H. Maurer 
Mary R. Sanford 

VlDA D. SCUDDER 

Helen Phelps Stokes 

Treasurer 

Stuart Chase 

Executive Directors 
Harry W. Laidi.fr 
Norman Thomas 

Chicago Secretaries 
Karl Borders 
Ethel Watson 



Executive Secretary 
Mary Fox 

College Director 
Paul Blanshard 

Field Secretary 

Paul Porter 

Secretary LJ.D. Lectures 
Mary W. Hillyer 

Membership Secretaries 

Jean Benson 
Anna Caples 

Secretary, Emergency Com- 
mittee for Strikers' Relief 
John Herling 

Publications Secretary 
Marion Humble 



Publications of the League for Industrial Democracy 



What's the Matter with New York? Paul Blanshard and 

Norman Thomas (Macmillan, 1932) $2.00 

As I See It. Norman Thomas (Macmillan, 1932) 2.00 

Americans Way Out. Norman Thomas (Maemillan, 

1931) 2.60 

The Road Ahead, Harry W. Laidler (Crowell, 1932)..,. 1,00 
Concentration in American Industry. Harry W. Laidler 

(Crowell, 1931) 3.75 

Socialist Planning and a Socialist Program, Edited by 

Harry W. Laidler (Falcon Press, 1932) 2.00 

History of Socialist Thought, Harry W. Laidler (Crow- 
ell, 1927) 3.50 

A Picture of America. Charles Cross (Simon & Schuster, 

1932) 1.00 

The Power Fight. Stephen Raushenbush (New Republic, 

1932) 1.00 

Socialism of Our Times. Edited by Harry W. Laidler 

and Norman Thomas, 1929 50 

Old Age Security, Abraham Epstein, 1930 , .15 

Incentives Under Capitalism and Socialism, Harry W- 

Laidler, 1933 15 

Mow America Lives, Harry 'W, Laidler, 1930 .15 

Public Ownership Here and Abroad. Harry W. Laidler, 

1931 , 15 

Unemployment and Its Remedies. Harry W. Laidler, 

1931 25 

Municipal Housing, Helen L. Alfred, 1932 .10 

Why I Am A Socialist. Norman Thomas, 1932 .05 

Wkat Is Industrial Democracy? Norman Thomas, 1932 .05 

Technocracy and Socialism. Paul Blanshard, 1933... .05 

Waste and the Machine Age. Stuart Chase, 1931 15 

Poor Old Competition. Stuart Chase, 1931 10 

Looking Forward; Discussion Outlines, I and H, each .15 

The Unemployed (An Emergency Magazine) .10 

Disarm I (An Emergency Magazine) .10 

The Student Outlook (formerly called Revolt} 10 

The L.I.D, News Sheet (Free to Members) 

And Other Books and Leaflets 
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